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Stock or Securities

Gifts of Stock or Securities

Contributing securities that have appreciated in value is often more advantageous than gifts of cash. Highly-appreciated stocks and bonds, when sold, result in a taxable capital gain. Under the Tax Reform Act of 1986, capital gain taxes significantly reduce sale proceeds.

Alumni and Friends who have invested in growth stocks and have realized significant appreciation sometimes find they cannot reinvest that portion of their portfolio without incurring a substantial tax liability on the gain.

Donating appreciated securities to KWU can unlock the profits of your investment and you will receive two tax advantages:

1) You avoid capital gain tax on the appreciation.

2) You receive a charitable income tax deduction for the full present market value of the property, regardless how much the value has grown from the purchase price.

Generally, gifts of appreciated securities are deductible up to 30% of your adjusted gross income. Gifts in excess of this amount may be carried forward up to five years. The appreciation element of charitable gifts is included as a preference item under the Alternative Minimum Tax (AMT). The application of the AMT is rare, limited to taxpayers with highly unusual situations. For these few individuals, the AMT can limit the tax benefit available for gifts of appreciated property.

As always, consult your financial advisors before making such a gift. Charitable gifts of appreciated assets are especially attractive. Maximum benefits are a reality when you donate the securities because you avoid selling them and realizing the gain.